Chenavari Toro Income Fund Limited Enhanced dividend policy - rebalancing of strategy (1781P)
June 08 2020 - 2:00AM
UK Regulatory
TIDMTORO
RNS Number : 1781P
Chenavari Toro Income Fund Limited
08 June 2020
Chenavari Toro Income Fund Limited (the Company)
08 JUNE 2020
Enhanced dividend policy and rebalancing of investment
strategy
In the past few years, the Board of the Company has implemented
several measures to seek to enhance the share price of the Company,
in particular by reducing the discount between the Company's share
price and the net asset value per share ("NAV per Share"). These
measures have included undertaking share buy-backs, the
implementation of a semi-annual tender offer mechanism, and a
simplification of the Company's investment strategy.
While the Board acknowledges that the Company's net asset value
("NAV") has held up more robustly than most of the Company's listed
peers in the recent major market dislocation arising from the
global COVID-19 pandemic, it also acknowledges the disappointment
caused to shareholders by the persistent share price discount to
NAV.
The Board is therefore pleased to announce the implementation of
a series of new initiatives with the intention of narrowing the
share price discount to NAV. These initiatives are as follows:
1. An enhanced dividend policy: The Company is targeting a
quarterly dividend yield of 2.5 per cent. (by reference to NAV)
equating to a targeted annualised dividend yield of 10 per cent.
(by reference to NAV). The Company's net target return remains 9-11
per cent. per annum
The dividend and net target return targets stated above are
targets only and are not a profit forecast. There can be no
assurance that these targets will be met and they should not be
taken as an indication of the Company's expected future
results.
2. The continued rebalancing of the investment strategy towards
tradable securities, as well as the realisation of illiquid assets:
Operating within the parameters of the Company's existing
investment policy, the Company's investment strategy will be
rebalanced with a focus on investment in liquid and tradable
European ABS/CLO, through the Company's existing "opportunistic
credit strategy" (provided that a significant market opportunity
arises). Consequently, the Company will cease to make new
investments in illiquid assets through its current "originated
transactions" and "private asset backed" strategies, but will
continue to support existing illiquid assets, where required, with
a view to maximising shareholder value. The Company will seek to
realise its illiquid assets and redeploy the proceeds into liquid
and tradable European ABS/CLO if the opportunity arises. In
addition to this rebalancing of the investment strategy, the
Company will continue to consider share buy-backs, where
appropriate, to assist in narrowing the discount to NAV, and will
continue to invest in hedging instruments.
3. The implementation of quarterly special distributions of
available excess cash: at the end of each calendar quarter until 31
December 2020, the Company will maintain a maximum cash balance in
its portfolio of 10 per cent. of NAV and will distribute all excess
cash above this balance arising in the portfolio as special
dividends on a quarterly basis. These special dividends will be in
addition to any quarterly dividends paid pursuant to the Company's
dividend policy outlined above. With effect from 1 January 2021,
the maximum cash balance cap will be reduced to a level of not more
than 5 per cent. of NAV, unless the investment manager, at its
discretion, decides to maintain such cap at a maximum of 10 per
cent., should market opportunities in liquid and tradable European
ABS / CLO arise.
The payment of any quarterly special dividends is a target only
and will be subject to the Company having excess cash available to
do. Shareholders should have no expectation of any such quarterly
special dividends being paid in any quarter or at all.
Fred Hervouet, Chairman of the Board, commented:
"The persistence of the discount to NAV has somewhat
overshadowed the underlying quality of the Company. We hope that
the announcement of these new initiatives will provide assurance to
shareholders that the Company will do whatever it takes to seek to
narrow and eventually eliminate the discount. Through these new
steps, we are demonstrating the Board's commitments to seek to; (i)
generate a high investment return profile for shareholders, and
(ii) maximize shareholder value".
Further information in relation to the Company is available
at:
http://www.chenavaritoroincomefund.com
Enquiries :
Kirstie Sumarno or Guy Goyard
Chenavari Investment Managers
Email: tlir@chenavari.com
Telephone: +44 20 7259 3600
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
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